- Flexibility: A person renting has much more flexibility when it comes to moving out of a situation, leases can be altered with landlord approval, and most of them are a shorter term to begin with. If you are picky about your neighborhood, if your work forces you to move, or if you still want to see a lot of the world, this might be the option for you.
- Saving Money to Invest: From maintenance to taxes, owning a home can be a money-sink. If you are in a part of your life where you need to be saving money for an expense (hobby, vacation etc.), renting could be the way to go.
- No Maintenance Responsibility: Renting means that the landlord pays for the repairs. This is another one of the money-savings bonuses of renting.
- No Equity: Buying a home is an investment, and if everything goes as planned, your home will appreciate in value. As a renter, you will be paying rent month in and month out, and you’ll never see a return on that money you put in.
- Lack of Control: Depending on your lease, you only have so much control on your home. Renovations, remodels, even things as simple as paint color and pet ownership are up to your landlord.
- The Dreaded Rent Hike: Each time a lease ends, the landlord has the option to increase the rent, and more often than not, they do. As long as the value of the property increases, so will your rent, and as a renter, that is a value that only you are paying for.
- Equity: Unlike the renter, if everything goes according to plan, you’ll get out more than you put in with your home.
- Self-Determination: As the homeowner, you have the final say when it comes to your property. Want to knock down a wall? Install a different type of stove? Put in a pool? Barring demands from homeowner’s associations and local ordinances, it’s all up to you. Additionally, no one will ever raise your rent, and you will be able to plan your finances for years in advance.
- Costs: Owning a home comes with a lot of costs. Maintenance, insurance, taxes, and mortgage rates are all big considerations when thinking of buying a home. Experts recommend setting $3,300 aside annually for home maintenance. Also, mortgage rates can fluctuate due to taxes, likely between 1%-3% of the home’s value.
- Decrease in Value: There are no guarantees in home ownership.
Buying vs. Renting Factors to Consider
- The Future: What do your plans for family and career look like? Is owning a home central to that, or an afterthought? If home ownership is a high priority part of your plans, go for it, but if buying a home is third or fourth on your list, you should probably wait.
- Finances: Do you have savings? Equity? Credit? If not, are you prepared to do the work to fix your credit and/or apply for assistance in putting down an initial payment? In order to qualify for most home loans, your debts should not exceed 28% of your income.
- Responsibility: Buying a home can be a full-time job, and owning a home can be that and then some. Do you have the time and commitment to make this change in your life? Owning a home is not right for everyone. If this kind of investment in time and money is not part of your plans, it’s better to know now than later.
Back to: How to Prepare to Buy a Home
The Home Buying Process Demystified
The home buying process is wrought with potential pitfalls and challenges, but when done right can be relatively painless. As champions of homebuying, we’ve created this step-by-step guide to help you through the process.
Below you’ll find an overview of the home buying timeline as well as the major components of the home buying process with links to the various steps, tools, and information to educate and empower your home search, discovery and purchase.
How Long Does it Take to Buy a Home?
Your timeline may vary, but the following is a good guideline
- Preparing to Buy a Home: 3-4 weeks
- Initial Search for Ideas: 1-4 weeks
- Building a Team: 1 week (overlap initial search)
- Pre-Approval of Mortgage: 12-48 hours
- The Home Search: 4-8 weeks (depending on criteria)
- Contract-to-Close: 14-60 days
So, on average a homebuyer will spend 30-60 days shopping and 14-60 days from contract to close. For some folks, the process can be extremely quick taking as little as 30 days total, while for others, the shopping period alone can last several months.
How Much Home Can I Afford?
The first step in the home buying process is understanding if you have the resources to buy a home. This includes knowing how much home you can afford, what type of down payment and monthly mortgage payment to budget for, as well as what type of loan program you’ll use to finance your new property.
Buying a home is a complicated process that requires a good deal of research. In the course of it, there will be a number of professionals and specialists involved. Once you’ve done your homework and assessed your resources, you’ll need to assemble your team.
Assembling Your Team
After you have a good understanding of your own wants, needs, and goals, it’s time to assemble your team and begin the home search! Who should be on your team? Who you’ll need to find on your own may vary, but the key team members could be: Real estate agent (could be a RealtorTM but not all agents are), home appraiser, title company, home inspector, insurance agent and mortgage lender.
When selecting the members of this team, take the same amount of care you would in choosing a home, because these people will be working for you to help you do just that. Trust & communication are key considerations in working with your team.
Sorting Out Your Finances
With the selection of a mortgage lender comes the application for mortgage pre-approval, a task that requires collecting the necessary financial paperwork to help obtain the approval. Once obtained the clock begins ticking because many pre-approval offers have a limited life-span before they expire.
Your Home Search
While you juggle the paperwork and timelines implicit to the process, remember that your team works for you. Now your search for (and discovering) your new home begins. Research, save, view and repeat. Remember Homes.com has all the tools you need to find and keep track of your favorite properties and home shortlist.
You’ve got a mortgage pre-approval in hand and have found a property you can afford to purchase and see yourself living in. Time for a purchase offer to a listing agent or seller!
Once you receive an acceptance offer, the due-diligence period starts a timeline of checks and tasks for final mortgage approvals, appraisals, inspections, and other requirements that would be stated in the terms of the contract.
Assessment, Conditions & Negotiation
Many consider this to be the most difficult part of the home buying process as it includes, but isn’t limited to, inspection, obtaining the final loan, purchasing insurance, and the potentially arduous negotiation. In this part of the process, every member of your team will be utilized, and the more homework you have done in building your team, the smoother this part will go. Those who haven’t conducted their proper due diligence could potentially see the purchase fall apart at this point.
Closing the Deal!
A successful closing requires all of the team players to come together at the same time, with the same agenda, on the same date, with numbers and figures that match. From the start of the home search to the home inspection and closing the deal, the entire home buying process can take most homeowners about three months.